The What, Why and How of Becoming a Digitally Transformed Credit Union

The What, Why and How of Becoming a Digitally Transformed Credit Union

The digital transformation of credit unions will start from within. The movement’s intrapreneurs – change agents motivated by possibility – took steps to decrypt the code of that transformation this week. Gathered in Seattle at the CO-OP / TMG Leadership Summit, credit union thought leaders came together with their colleagues to learn not only the “what” and “why” of digital transformation, but importantly, the “how.”

How to Define Your Purpose

Anyone inspired to bring about change can be challenged by legacy systems, culture and processes. To address that potential roadblock, former Xbox team leader Robbie Bach shared his approach to innovation inside an already successful organization – in his case, Microsoft. One of the key elements, he said, is the development of a strong purpose statement. “To successfully pull off innovation inside an established company, you have to be able to tell people what you’re doing this for and why,” he advised Summit attendees.

Bach not only talked about what worked at Microsoft. He humbly shared what didn’t: “On our first try, we had no real strategy. We had two goals – to launch by a specific date and to make the explosions look really cool.” Things turned around in a big way for the Xbox team when they established a clear purpose, supported it with a defined strategy and executed their stated priorities with a strong team.

How to Avoid Tech for Tech’s Sake

Bach’s point was echoed by several other Summit speakers, each reinforcing the idea that innovating just to appear innovative will not work to improve experiences for members. Tom Goodwin, EVP of innovation for Zenith Media, told of his repeated poor experiences with a rental car company. When that company replaced human representatives with video kiosks, but changed little else, his lousy experience became nothing but a digitized lousy experience.

On the other hand, a rental car company in the U.K. has used technology to completely transform the car pick-up process into a simple “tap-and-drive” experience. Customers can now use their contactless credit cards to not only pay for the rental vehicle, but also to tap it on a reader inside the car to access keys from the glove box.

“Consumers aren’t just looking for faster ways to pay; they’re looking for extra utility from their payment tools,” said Visa’s Global Head of Issuer Digital Solutions Natalie Kelly during a panel discussion. Kelly was joined by CO-OP Chief Product & Strategy Officer Shazia Manus, First Data Vice President Seth Perlman and Ford Motor Company Futurist Sheryl Connelly.

Manus agreed with Kelly: “We can’t get too bombarded with the nuances of technology. When we look at our services from the consumer lens, we see so much more clearly the real problems we can solve.” Manus used the example of an empty nester sending regular payments to a child away at college to illustrate her point. “It’s not really about moving money from point A to point B. It’s about the parent wanting to ensure her child is taken care of,” Manus said. “So knowing that, how can we perhaps automate that regular transfer with a digital solution? And then can we go beyond? Maybe we integrate a communication channel into the financial solution – something that reassures momma bird that baby bird received the money and is doing well.”

How to Fulfill Members’ Jobs to Be Done

Getting to the heart of what members are looking for was another critical “how” discussed during the Seattle event. Marketing Consultant Uwe Hook, while unveiling new research conducted by CO-OP, talked about these insights as part of the “Jobs to Be Done” framework.

More deeply understanding the motivations and emotions behind a member’s choice or behavior reframes the way digitally transforming organizations look at their competition. It is what helps an ice cream shop owner, for example, understand his competitors aren’t other ice cream shops alone. When he understands his customer is a parent looking to treat a child, he can also see that the toy store in the mall or the playground down the street is just as much a competitor.

How to Think Like a Futurist

Although we’re getting closer with the help of technology like machine learning and artificial intelligence, we cannot truly predict the future. There are too many unknowns. However, we can find clues to what’s around the bend if we pay close attention to the stories told through data. That was the message of several Summit speakers, including Mastercard’s SVP and Group Head of Marketing Insights Sarah Quinlan.

Backed by consumer spending intelligence analyzed by more than 2,000 Mastercard data scientists, Quinlan delivered a presentation jam-packed with insights on what today’s spending behavior tells us about tomorrow’s opportunity.

“You do not work in a vacuum,” said Quinlan. “You can have the best strategy, but if you don’t understand how members are spending, you can’t help them.”

How Millennials in particular are spending and the attitudes, beliefs and principles that spending reflects made up a sizable portion of Quinlan’s talk. Among her observations was that Millennials, who are currently enjoying the highest acceleration of wages, prefer to put their money to work for experiences rather than material possessions.

That desire for experiences, Quinlan suggested, just may keep people interested in real-world shopping and in-person visits to a branch. She emphasized this with a word of caution for the credit union leaders in the room: “Be careful when you talk about digital. Consider how you can curate an experience digitally and then give members the option to finish business with you in person.”

How to Embrace the Digital Consumer

Both new and traditional competitors were hot on the minds of Summit attendees. CO-OP CEO Todd Clark talked about fintech startups that have earned more customers in five years than most credit unions have in 50. “They are entering our space. Digital has lowered the barriers to entry into the financial services market,” Clark said.

Fintech startups are in pursuit of the digital consumer for good reason. Clark explained why: The digitally engaged consumer spends more, costs less and is easier to retain. “This consumer is a really good member who helps you do more for all members,” Clark said. “That’s an amazing opportunity for credit unions. If we can digitize even a small component of what you’re doing, it’ll be a big win.”

Clark went on to share how CO-OP plans to do exactly that, alongside leaders from its recently acquired strategic partner of five years, TMG. “We are co-creating an ecosystem that will fuel your growth and retention strategies,” Clark said. “We’re here to help you deal with the reality that digital is coming, and we are pushing down a path to digitize your member experience as best, and as quickly, as we can.”